Kraft CEO Says Private Label Has Peaked

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August 18, 2010

Private label market share has peaked and is actually declining in some categories, Irene Rosenfeld CEO of Kraft Foods recently told analysts.

“Without a doubt private label share has stabilized,” she told analysts in an Aug. 6 quarterly earnings call. “That's been true over the last couple of quarters, and, in fact, in some cases we're seeing it begin to decline. So I don't expect a dramatic change there and I think, again, the investments that we are making in our brand franchises, in our brand equities as well as in our innovation pipeline, are, we believe, the way to set ourselves apart over the long term. And so I think we're going to be well positioned to be able to address our market position in the future as a consequence of that investment.”

Asked by a Morgan Stanley retail industry analyst if the private label sales deceleration was occurring even prior to accelerated branded promotional spending, Rosenfeld said: “I would say that's correct because we basically saw that private label share seems to have a water level, we actually saw it reach that water level a couple of quarters ago, and we haven't seen really much change since that time.

She added that brand differentiation continues to be Kraft’s battle cry. “Our approach to dealing with private label, as well as any of our competitors in any of our categories, is to continue to differentiate our brands by investing in equity and investing in the innovation pipeline,” Rosenfeld noted. “And so far, that seems to be serving us well in most markets around the world.”

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